I've brought you the most widespread myths about forex trading. You may know some of them in one way or another, but I decided to give you simple explanations about them, especially those who fear technical details.
Do you believe any of these myths? Read and share your thoughts in the comments below.
N° 1 - You can earn 100%
Loss is inevitable in trading, and may be exposed to any trader or system. Unfortunately, the perfect can not be achieved, even the best traders lose money. There are thousands of unknown participants in the market. Each has its own purpose that you can not know in advance. A trader loses when he does not stick to his plan, regardless of the outcome (profit or loss) of a transaction.
The probability of a loss is the only definite possibility of profit, because any loss to a counterparty is a profit to another party. Without a little adventure, you can not make a profit. If you learn the basics, develop a good strategy and trade on it, in addition to risk management - your balance will undoubtedly grow.
N° 2 - A good system can be applied to another time frame, and it remains profitable
Markets are fairly fractal, but price patterns over long time frames are qualitatively different from their counterparts on shorter time frames. This is due to factors such as macroeconomics, the intersection of participants' concerns, the larger common average, the liquidity required of the most important players, the relative impact of announcements, economic releases, meetings, etc. You can not change the time frame of the strategy waiting to work the same.
N° 3 - Is it a good idea to bet on your luck ?
So far, there is no scientific evidence that if you can make a profit, your chances will fall next time. Withdraw just because you have made a profit (so as not to "bet on your luck") has no logical basis. Millions of traders make profits and lose every day. The market will not change direction due to one trader.
To simplify the matter, your chances of profit or loss exist all the time. The direction and behavior of the market will not change just because you "as an individual" have achieved a set of consecutive "profits or losses".
N° 4 - It is better to focus on one main pair or couple
This is useful to some, but most often, expert traders advise diversifying your portfolio. This helps to manage risks in addition to making the most of trading.
For example, the combination of the most volatile currencies (the stronger vs. the weaker) offers the best profit opportunities through strong and clear moves.
For example, if a pair of GBP / USD and USD / JPY are heading higher, GBP / USD and JPY / GBP will move higher.
N° 5 - Adding more filters to your chart will improve your trading results
All indicators are derived from the price (and sometimes from the size). This means that adding more indicators to the same time frame will not necessarily represent an independent assertion nor an added value. In the end, the trader must enter the transaction at a candlestick, and can specify the time and place of entry by re-calibrating existing indicators.
Nonlinear indicators (aimed at reducing and overcoming disparities without compromising harmony) are not necessarily better than traditional indicators. Attempting to enter the market early may lead to entry when a slight correction of the trend and not when a full reversal.
N° 6 - All price movements are subject to randomness
Many traders and analysts think about this point, especially at times when it seems that whatever you do, the market remains unpredictable. Many people have fallen into this trap, but we will remain rational and try to analyze whether this is true.
Imagine that all sorts of analyzes are worthless, all systems will expect a zero result in the long run, and profit / loss will be totally random and eventually all traders will lose. It seems both horrific and illogical.
Many successful traders realize that this is not true. However, let us investigate some non-random evidence for those who have doubts:
- High price hikes that track ads and newsletters.
- Stability of prices / taking profits following the rise following news.
- Traders tendency to place stop orders outside swing points.
- Large fluctuations in the market while waiting for important news announcements and others.
In any case, the fact that it is not random does not mean that the trader wins all the time automatically. The heights that immediately follow the important news are an example.
All price movements are subject to completely false randomness. Profit from trading in accordance with a system is fixed and mathematically possible. What may seem random at first sight is probably due to lack of information or experience.
If you are an Arab trader, you can read the article in Arabic from its original source : https://fbs.ae/blog/6-أساطير-شائعة-عن-سوق-الفوركس-48
I agree, especially with point No5.
I tried a lot of indicators, but now i have the best results by using just 2-3 of them (bollinger, pivot points and fibo).
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Forex isn't like betting......it's something to sure of.
Above all risk management is key
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